Step-by-step tutorial · Non-custodial

How to Short Crypto With Perpetuals, Step by Step

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What a short perp position is

A short position on a crypto perpetual future is a way to profit when a cryptocurrency’s price falls. If you have only ever bought crypto before, you are familiar with going long: you purchase an asset, hold it, and make money if its price rises by the time you sell. Shorting flips that order: you effectively sell the asset first at the current market price, then buy it back later to close the position. If the price drops between when you open and when you close, you keep the difference as profit. If the price rises, you lose money, because you have to buy back the asset at a higher price than you sold it for. Perpetual futures (called perps for short) have no set expiration date, so you can hold a short position for as long as you have enough collateral (called margin) in your account to keep it open, unlike dated futures that settle on a fixed day.

Short and long positions use identical mechanics

For anyone who has opened a long perp position before, shorting is not a separate, more complex process — the two are structurally symmetric, with the same interface, risk controls, and pre-trade transparency. The only action that changes is selecting "short" instead of "long" when placing the order; every other step works exactly the same way.

Margin requirements are identical for long and short positions. On Trending, the minimum margin for any position (long or short) is $20, and leverage works the same way: it amplifies both potential gains and potential losses by the same factor, regardless of direction.

Trading fees are also identical. The underlying venue charges 0.01% for maker orders and 0.035% for taker orders, plus a 0.02% builder fee, and these rates apply equally to long and short trades.

Before you confirm any position, you see the same set of risk metrics. On Trending, the liquidation price — the price at which the position would be automatically closed to prevent further losses — is displayed clearly before you submit the order, whether you are going long or short. You do not have to calculate it yourself, and there is no extra hidden risk check for short positions.

Perp positions pay or receive a small periodic funding payment to keep the contract price aligned with the underlying asset’s market price. This payment works the same for both sides: if the perp price is above the market price, longs pay shorts; if it is below, shorts pay longs. The mechanism is symmetric, and the rate is the same for all traders on the contract.

The key asymmetry: Unbounded loss for unhedged shorts

The only meaningful structural difference between long and short perp positions is the theoretical maximum loss of a completely unprotected short. When you buy crypto (or open a long perp position), the most you can lose is 100% of the capital you put into the position, because a crypto asset’s price cannot fall below zero. For a short position with no stop-loss or liquidation trigger, there is no upper limit to how high the asset’s price could rise, so your potential loss is not bounded by the price at which you entered the position.

This is a real risk, but it is important to put it in perspective. In practice, all perp platforms have liquidation mechanisms that automatically close a position before you lose more than your initial margin (plus any applicable fees). For a short, liquidation triggers when the price rises to a predefined level above your entry, just as it triggers when the price falls to a predefined level below entry for a long. The percentage move required to trigger liquidation is the same for both directions at the same leverage.

The unbounded loss risk only becomes relevant if you avoid using stop-loss orders and the position somehow avoids liquidation (a rare scenario on well-run platforms). Even so, it is the reason shorting requires more intentional risk management for new traders, especially if you are used to only buying and holding, where the worst-case outcome is a total loss of your initial investment.

Step-by-step to open a short perp position

1. Choose the asset you want to short. Pick a crypto you expect to drop in value, ideally one with high trading liquidity to avoid slippage when entering and exiting. Bitcoin and Ethereum are the most liquid perp markets, making them good choices for first-time short traders.
2. Navigate to the perp trading interface for that asset. Make sure you are on the perpetual futures market, not the spot market — spot markets only let you buy or sell the actual asset, not open short positions with margin.
3. Toggle the trade direction to "short". This is the only setting that differs from opening a long position. All other fields (size, leverage, order type) work the same way.
4. Enter your position size and leverage. Start small, especially if you are new to shorting. The minimum margin for a position on Trending is $20, the same for longs and shorts. If you use leverage, remember it amplifies both gains and losses equally, just like it does for long positions.
5. Review your liquidation price. Before you confirm the trade, check the liquidation price shown on the screen. For a short position, this is a price higher than your entry; if the asset’s price reaches this level, the position will be automatically closed. On Trending, this price is calculated and displayed before you submit the order, so you know exactly how much the price would need to rise to trigger liquidation.
6. Set your take-profit (TP) and stop-loss (SL) orders before confirming the position. This is the most important step for managing short risk, and it is far better to set exits before you open the position than to try to place them afterward. A take-profit order automatically closes your short when the price drops to your target, locking in your profit. A stop-loss order automatically closes your short when the price rises to your maximum acceptable loss level, capping your downside. On Trending, TP and SL orders rest on-chain and trigger even if the app is closed, so you do not have to monitor the market 24/7 to protect your position. Setting exits upfront removes emotional decision-making if the market moves quickly, which is especially critical for shorts given the theoretical unbounded loss of unprotected positions.
7. Confirm the order. Once you have verified your size, leverage, liquidation price, and exit orders, submit the trade. Your short position will open as soon as the order fills, just like a long position would.

When shorting perps is not the right fit

Short perps are a flexible tool for downside exposure, but they are not the best choice for every trader. If you want strictly defined maximum loss with no liquidation risk, buying a put option on the same asset is a better alternative: you pay a fixed upfront premium, and the most you can lose is that premium, even if the price rises sharply. If you are not comfortable using stop-loss orders or monitoring positions periodically, shorting perps carries unnecessary risk, and you may be better off simply reducing your long holdings or holding stablecoins if you expect a market downturn. Shorting is also not appropriate if you are trading with money you cannot afford to lose, as sudden price gaps (which can happen during news events or low-liquidity periods) can lead to losses larger than your initial stop, though this risk applies to long perp positions as well.

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